Auditing in CIS Env
derived from societal morse and deep-rooted personal beliefs about issues of right and wrong that are not universally agreed upon
Ethics
pertains to the principle of conduct that individuals use in making choices and guiding their behavior in situations that involve the concepts of right or wrong
Ethics
involves dinsing thw answers to:
*how do managers decided what is right in conducting their business?
*once managers have recognized what is right how do they achieve it?
Business Ethics
ethical issues in business can be divided into four areas:
1. Equity
2. Rights
3. Honesty
4. Exercise of corporate power
The benefit from a decision must outweigh the risks. Furthermore, there must be no alternative decision that provides the same or greater benefit with less risk.
Proportionality
The benefits of the decision should be distributed fairly to those who share the risks. Those who do not benefit should not carry the burden of risk
Justice
even if judged acceptable by rhe principles, the decision should be implemented so as to minimize all of the risks and avoid any unnecessary risks.
Minimize Risk
denotes a false representation of a material fact made by one party to another party with the intent to deceive and induce the other party to justifyably rely on the fact to his or her detriment
Fraud
in accounting literature fraud is commonly known as
1 white collar crime
2 defalcation
3 embezzlement
4 irregularities
two levels of fraud in business
employee fraud
management fraud
a model for explaining the factors that caused someone to commit occupational fraud
the fraud triangle (donald cressey's fraud theory,1950)
the authors of this model believe that many frauds would have not occurred without the right person with the right capabilities implementing the details of the fraud as addition to the fraud triangle
the fraud diamond (wolfe, d.t. and hermanson, d.r., 2004)
in this model they suggested that motivation of fraud perpetrators which is one of the sides in the front triangle may be more appropriately expanded into MICE money, ideology, coercion, and ego
MICE Fraud model
how does fraud occur?
-poor internal controls
-management override of internal controls
-collusion between employees and third parties
-collusion between employee and management
-poor or non existence of ethical policies
examples of fs fraud
fictitious sales, improper expense recognition, incorrect asset valuation, hidden liabilities, unstable disclosures
corruption
involves an executive manager or employee of the organization and pollution with an outside
four principal types of corruption according to association of certified fraud examiner
bribery
illegal gratuities
conflicts of interests
economic extortion